CAPITAL MARKETS ADVISORY AND DEVELOPMENT TASKFORCE UPDATE
23 October 2020
At its meeting on 1 October, the Capital Markets Advisory and Development Taskforce noted the progress reported by key capital market stakeholders, including a number of developments in the current COVID-19 related economic environment:
Stock Market Update: The South Pacific Stock Exchange (SPX) reported that the SPX Total Return Index (STRI), which is based on the market capitalisation weighting of the listed entities stood 1.0 percent higher in Quarter 3, 2020 when compared to the same period last year. Similarly, the SPX Equal Weighted Price Index registered a 15.0 percent annual increase. The SPX recorded a lower volume and value of traded securities during the review period on account of various high-volume one-off transactions in the previous year. The bid-to-offer ratio increased by 29.0 percent on an annual basis and was mainly due to the high value sell orders for selected listed entities. For new investors, it was noted that there was greater participation of retail investors in the 36-55 year age group and a shift in focus towards portfolio diversification.
World Exchange Congress Update: The Taskforce members noted that Fiji will still host the next World Exchange Congress and that the timing of the event will depend on various factors such as the easing of global travel restrictions, owing to the ongoing COVID-19 pandemic. The WEC was initially scheduled to be hosted in June 2020 in Nadi.
Managed Investment Schemes (MIS) Update: During the June 2020 quarter, the MIS industry recorded a 6.7 percent contraction in the value of funds under management to $367.8 million. Over the quarter, the number of unitholders grew by 688 while investment income registered an increase of 10.5 percent to $8.7 million.
Wholesale Corporate Bond Development Work Continues: The Taskforce noted the new tax incentives for corporate bonds and the repeal of the Stamp Duty Act 1920, as outlined in the 2020-2021 National Budget. The tax benefits for corporate bond issuers include a 150 percent tax deduction on the prescribed cost of listing corporate bonds on the SPX and a 150 percent tax deduction on the interest paid on corporate bonds. In addition, corporate bond investors are exempt from taxation on interest income earned on corporate bonds. It was also noted that the RBF and the SPX, with technical assistance from the International Finance Corporation, were collaborating with the Fiji Revenue and Customs Services to ensure the smooth implementation of the tax benefits while work on the draft Companies (Wholesale Corporate Bonds) Regulations was underway and nearing finalisation. The South Pacific Stock Exchange is also working on formulating the trading rule book for listing and trading of Wholesale Corporate Bonds on the SPX.
Capital Markets Awareness: Taskforce members noted the need to restrategise Capital Markets awareness in light of the ongoing COVID-19 developments to encourage and sustain capital raising for Fijian businesses and enhance investor participation. To this end, the use of social media was raised as an appropriate and cost- effective awareness channel to connect with targeted audiences. The Taskforce supported the move to leverage existing social media platforms, such as the recently introduced FinTalk Fiji Facebook page, to continue carrying out capital markets awareness campaigns.
Capital Markets Advisory and Development Taskforce membership: Mr Ariff Ali, Governor of the Reserve Bank of Fiji; Mr Esala Masitabua, Deputy Governor of the Reserve Bank of Fiji; Ms Makereta Konrote, Permanent Secretary for Economy, Ministry of Economy; Mr Pradeep Patel, Senior Partner, BDO Fiji; Ms Lisa Apted, Partner, KPMG; Mr Nitish Niranjan, CEO, VB Holdings Ltd; Mr Pretesh Prasad, Acting CEO, SPX; Mr Sakiusa Bolaira, Regional General Manager Development and Company Secretary, Unit Trust of Fiji; Mr Haroon Ali, Country Manager BSP and Association of Banks in Fiji Representative; Mr Abilash Ram; Acting CEO, FHL Group Ltd; Ms Krishika Narayan, COO, FijiCare Insurance Ltd; Ms Caroline Waqabaca, Chief Manager Financial Markets, Reserve Bank of Fiji; Mr Poasa Werekoro, Chief Manager Financial System Development, Reserve Bank of Fiji; and Mr Apenisa Tuicakau, Manager Domestic Markets, Reserve Bank of Fiji.